The Housing Authority of the City of Milwaukee (HACM) has faced severe financial mismanagement, as revealed in an internal letter from Chief Financial Officer Brad Leak. The letter, made public following a special board meeting on January 31, highlighted that since 2019, HACM had diverted $2.8 million from its Section 8 Voucher Program to cover administrative expenses, including staff salaries. This misuse of funds has raised significant concerns over the management of one of the city's largest housing assistance programs, which supports low-income residents with housing needs. The situation has prompted urgent action from the U.S. Department of Housing and Urban Development (HUD), leading to a new agreement aimed at rectifying the agency’s financial issues.
The core issue revolves around the improper allocation of federal funds intended for housing vouchers. According to the CFO's letter, HACM has been using these funds to pay for operational costs, a practice that violates federal guidelines. This misuse has put the agency at risk of bankruptcy within 45 days if corrective measures were not taken. The January 31 board meeting focused on addressing this crisis by entering into a recovery agreement with HUD. This agreement outlines strict requirements and deadlines for HACM to adhere to, including submitting overdue financial reports and conducting inspections of public housing properties.
HACM's financial troubles have been under scrutiny since 2023, when residents began reporting health and safety concerns in public housing buildings. An audit conducted by HUD in 2022 identified a $2.5 million discrepancy in financial reports, further highlighting the extent of the mismanagement. In response to these findings, HUD ordered HACM to bring in a third-party manager and conduct a forensic audit to investigate past financial practices. The agency has acknowledged these issues and is working to implement changes, including laying off 20 employees as part of cost-cutting measures.
To address the ongoing challenges, HACM has committed to following the HUD-mandated recovery plan, which includes improving fiscal management, enhancing tenant services, and upgrading housing conditions. The board is also exploring the possibility of hiring an independent professional to conduct a thorough examination of past financial management issues. These steps are crucial for restoring trust and ensuring the long-term stability of the agency, while minimizing the impact on residents and partners.
The road ahead for HACM will require strict adherence to the recovery agreement and a renewed focus on transparency and accountability. The agency's leadership must take decisive action to correct past mistakes and ensure that federal funds are used appropriately to support those who rely on housing assistance. With the support of HUD and a commitment to reform, HACM aims to emerge from its troubled status and provide better services to the community it serves.